Alphabet reported second-quarter 2026 revenue of $119.8 billion on Wednesday and lifted its full-year AI capital expenditure guidance to a range of $195 billion to $205 billion, up from the $180 billion to $190 billion band the company set just three months ago.
Cloud Surges 82%, Backlog Hits $514B
Google Cloud grew 82% year-over-year to $24.8 billion, well ahead of consensus, with cloud backlog reaching $514 billion — a signal management said supports strong long-term infrastructure utilisation. Adjusted earnings per share came in at $9.11, exceeding the $2.88 forecast, though a large chunk of the beat came from unrealised gains on public and private equity investments rather than operating earnings.
Capex Hike Rattles The Market
Second-quarter capital expenditures totaled $44.9 billion, slightly above Wall Street's $44.7 billion forecast. Alphabet stock fell 5.4% in extended trading to about $323.32 as investors digested the higher 2026 spending band, which alongside recent CapEx guidance from Meta and Anthropic's $10B compute lease underscores how quickly hyperscaler AI spending is compounding.
What The Guidance Implies
At the midpoint, Alphabet's 2026 capex would climb roughly 60% year-over-year, with more than $80 billion earmarked for AI infrastructure buildout including new TPU generations, expanded Google Cloud regions and interconnect. Management pointed to sustained demand from Gemini Enterprise, expanded custom-silicon customers and larger sovereign-cloud deployments — a trend that also drove Microsoft and Mistral's multi-billion-dollar Azure sovereign deal earlier this month.
The results land the same week AMD unveiled its MI455X accelerator and Helios rack at Advancing AI 2026 in San Francisco, and hours before Tesla reported record Q2 revenue.
Reporting based on coverage from CNBC, Alphabet Investor Relations, TradingKey and Seeking Alpha.